This study note looks at the difference between income and wealth
Income is not the same as wealth
Income is a flow of money going to factors of production:
Wealth is a stock concept – it is a large amount of money or valuable possessions and can be held in different ways:
Many dimensions of poverty
Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time. Poverty is losing a child to illness brought about by unclean water. Poverty is powerlessness, lack of representation and freedom.
Source: World Bank Development Report
Wealth generates income for if you have built up savings balances they ought to pay interest (although interest rates are low at the moment!). Shares lead to a flow of dividend payments. An occupational pension scheme will eventually allow someone to receive an income when they have retired.
Inequality in the distribution of income and wealth
Living standards depend on the level of economic activity and on the redistribution of resources within society as a whole. The level of inequality of income and wealth can be measured by:
Mean and median income in the UK
For 2009 the figures (in £s per week) were as follows:
6 per cent of individuals in Britain live in households with disposable incomes of £1,000 per week or more and this helps to explain why the mean value for household income exceeds the median.
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